A modified gross lease is a commercial lease in which the tenant pays a fixed base rent on a monthly or annual basis, but also agrees to pay a proportional amount of the operating expenses for the property, such as:

• taxes

• property insurance

• utilities

• maintenance and repairs (including structures such as the roof), systems (heating, ventilation, and air conditioning and electrical)

• common area maintenance (CAM) such as maintenance of the parking lot, landscaping, maintenance staff, security staff, and maintenance of elevators and escalators.

There are many variations of modified gross leases, with different expenses reimbursed by the tenant to the landlord, and different methods of calculating the tenant’s proportionate share of the expenses.

In Washington State, a modified gross lease is a type of commercial lease agreement where the tenant pays a fixed base rent plus a share of the property's operating expenses. These expenses can include property taxes, insurance, utilities, maintenance and repairs of structures and systems, and common area maintenance (CAM) costs. The specific terms of a modified gross lease can vary widely, with tenants sometimes responsible for different combinations of expenses and the method of calculating their share of these costs differing from lease to lease. The exact obligations of the tenant are typically detailed in the lease agreement, and it is crucial for tenants to review these terms carefully, possibly with the assistance of an attorney, to understand their financial responsibilities. Washington State law does not prescribe a specific format for modified gross leases, so the terms are largely determined by negotiation between the landlord and tenant.